Nike, Inc. shares were sent flying on Thursday afternoon as the largest athletic company in the world reported
revenues for its fiscal second quarter amounted to $12.4 billion, down 8 percent on a reported basis compared to the prior-year second quarter and down 9 percent on a currency-neutral basis.

  • Nike Brand revenues were $12.0 billion, down 7 percent year-over-year (y/y) on a reported basis and down 8 percent y/y on a currency-neutral basis, driven by declines across all geographies.
  • Nike Direct revenues were $5.0 billion, down 13 percent y/y on a reported basis and down 14 percent y/y on a currency-neutral basis, primarily due to a 21 percent decrease in Nike Brand Digital and a 2 percent decrease in Nike-owned stores.
  • Wholesale revenues were $6.9 billion, down 3 percent y/y on a reported basis and down 4 percent y/y on a currency-neutral basis.
  • Revenues for Converse were $429 million, down 17 percent y/y on a reported basis and down 18 percent y/y on a currency-neutral basis, due to declines across all territories.

Zacks Consensus Estimate for fiscal second-quarter revenues was $12.2 billion, or a 9.1 percent decline from the prior-year fiscal Q2 reported revenues.

“After an energizing 60 days of being back with my Nike teammates, our clear priority is to return sport to the center of everything we do,” said Elliott Hill, President & CEO, Nike, Inc. “We’re taking immediate action to reposition our business, so we can get back to driving long-term shareholder value. Our team is ready to go, and I’m confident you will see more moments of Nike being Nike again.”

Divisional Revenues

Income Statement Summary

Gross margin decreased 100 basis points y/y to 43.6 percent of revenues, primarily due to higher discounts and changes in channel mix, partially offset by lower product input costs as well as lower warehousing and logistics costs.

Selling and administrative expense decreased 3 percent y/y to $4.0 billion.

Demand creation expense was $1.1 billion, up 1 percent y/y, primarily due to an increase in sports marketing expense offset by a decrease in brand marketing expense.

Operating overhead expense decreased 5 percent y/y to $2.9 billion, due to lower wage-related expenses and lower other administrative costs.

The effective tax rate was 17.9 percent for Q2, compared to 17.9 percent for the fiscal Q2 period last year.

Net income was $1.2 billion for the quarter ended November 30, down 26 percent y/y, and diluted earnings per share was 78 cents, a decrease of 24 percent year-over-year.

Zacks Consensus Estimate for fiscal second-quarter earnings was 64 cents per share, or a decline of 37.9 percent from the year-ago reported number.

NKE shares were up nearly 10 percent in after-hours trading before settling back into the mid- to high-single-digits as the company beat Wall Street estimates for both the top- and bottom-line results.

“Nike’s second-quarter financial performance largely met our expectations, as we continue to make progress in shifting our portfolio,” said Matthew Friend, EVP and CFO, Nike, Inc. “Under Elliott’s leadership, we are accelerating our pace and reigniting brand momentum through sport.”

Balance Sheet Summary

Inventories for Nike, Inc. were $8.0 billion at quarter-end, flat compared to the prior-year quarter-end, reflecting an increase in units offset by lower product input costs and product mix shifts.

Cash and equivalents and short-term investments were $9.8 billion, down approximately $0.2 billion from last year, as cash generated by operations was more than offset by share repurchases, cash dividends and capital expenditures.

Shareholder Returns

Nike said it continues to have a strong track record of consistently increasing returns to shareholders, including 23 consecutive years of increasing dividend payouts.

In the second quarter, the company returned approximately $1.6 billion to shareholders, including:

  • Dividends of $557 million, up 7 percent from the prior year.
  • Share repurchases of $1.1 billion, reflecting 13.1 million shares retired as part of the company’s four-year, $18 billion program approved by the Board of Directors in June 2022.

As of November 30, 2024, a total of 112.8 million shares have been repurchased under the program for a total of approximately $11.3 billion.

Image courtesy Nike, Inc.

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